Op-Ed

Tourism: Lessons from COVID-19

Preliminary Organization for Economic Co-operation and Development (OECD) estimates indicate that there will be a 45 percent decline in international tourism this year because of COVID-19, with the possibility to further decline by September. This can have negative economic implications for countries like The Bahamas and others around the world that depend heavily on the tourism industry as a primary pillar of revenue. It is estimated that the industry contributes to nearly 40 percent of The Bahamas’ gross domestic product (GDP). An Oxford Economics (2019) assessment also points out that tourism employs directly 27 percent of the workforce and indirectly, around twice as much. Therefore, it should not be taken lightly that hotels are temporarily closed and international/domestic travel is banned. The economic development of the country is hinged on all aspects of tourism. This segment will explore challenges faced by the industry and what are the best steps to take based on lessons from COVID-19. It is important that these learnings are considered by policy makers to be drafted into the National Development Plan (NDP).

A new reality

The United Nations’ World Tourism Organization (UNWTO) has pointed out that tourism is one of the most impacted sectors as a result of COVID-19. It also estimates that small and medium-sized enterprises (which make up around 80 percent of the tourism sector) are expected to be particularly impacted. For The Bahamas, this is an added downside in addition to recovery efforts from Hurricane Dorian, fiscal restrictions and a stiff tourism market within the region. Global travel is expected to slow down even after restrictions and travel bans are lifted, since many will be faced with new economic challenges and budget constraints. But for those who can still enjoy travelling, they will be faced with new measures to ensure ‘responsible travelling’. Self-health precautions at airports will become the new norm and health related technology will play an important part in allowing visitors to enter boarders.

While many countries are desperate to recover, it is also important to put people first. For instance, with an increased amount of cruise ship passengers, screening and health checks need to be in place before disembarking because these vessels carry large amounts of people. In addition, the Bahamian government should be weary on allowing visitors from countries where the virus has proliferated numbers such as the United States, Italy and Spain. Unfortunately, a bulk of our tourists come from the United  States and the European market. Therefore reopening the economy will require strong collaboration regionally and internationally along with strict safety measures in place at boarders. The best form of screening and testing should be also be adopted.

But the sector’s recovery will require more than new hotel bookings and lifted restrictions. The United Nations Conference on Trade and Development (UNCTAD) points out that countries may be able to weather economic storms by relying on additional debt or using available foreign reserves. “However, access to global capital markets is increasingly tight, more so for small countries such as small island developing states (SIDS), which are often highly indebted and not well diversified… Many of the SIDS, like Jamaica and The Bahamas, also face high external debt burdens which require complementary external debt suspension or relief programs.” The author also points out that the World Travel and Tourism Council (WTTC) found that in previous viral epidemics the average recovery time for visitors to a destination was about 19 months. As numbers continue to increase for COVID-19, this recovery time could be longer. Therefore, the government needs a plan that will sustain tourism, shore up revenue losses but also look outside of heavily depending on this sector for economic growth.

Diversifying the economy

Diversification within economies plays a key role in how The Bahamas and other Caribbean countries will survive in the future. Industries like tourism along with other service sectors (banking, insurance, etc.), have always provided jobs to Bahamians and as a result, play a crucial role keeping the domestic economy functioning. However, we have seen that unprecedented disasters, even the ones we can prepare for, have always had an impact on the service sector, particularly tourism. Before COVID-19, natural disasters such as hurricanes have wiped out millions of dollars in revenue and in some instances, completely halted operations. In Grand Bahama, the bulk of its fragile economic state is due to the closure of major hotels on the island from the passage of major hurricanes. Notwithstanding that the tourism industry is very competitive and due to high labor costs in The Bahamas (comparatively), investors are now looking for the best deals on labor, consumables and utilities. In addition, cruise ship visitors have increased in numbers due to cheaper vacation packages. These visitors will tend to spend less than stop-over visitors. Notwithstanding a near $1 billion expenditure loss from reduced visitors as a result of COVID-19, decades have passed and no government has successfully implemented a plan to build a resilient economy for The Bahamas. Justin Ram, director of economics at the Caribbean Development Bank (CDB), urged that “Leaders must invest in a diversified future to reduce our overall vulnerabilities.” Unfortunately, the concept of ‘box tourism’ will no longer be sustainable. A plan should include steps towards a sustainable tourism sector with the expansion of Bahamian owned boutique hotels, ecotourism activities on the Family Islands and a service led industry that allows for human resources to be exported rather than imported. This pandemic should warn leaders that the reliance on tourism is simply not sustainable and that while improving the industry is beneficial, looking outside to more innovative sectors would be better to build on for future economic and social development.

Conclusion

The government has provided a measured plan for reopening the economy; reopening the boarders and restarting tourism will be the final stage. They mentioned that they are currently working with industry and regional partners to ensure “a strong rebound that will meet global health standards and protocols”. These discussions should go beyond restarting but look to diversifying the economy in the event of unexpected events such as at COVID-19. This pandemic should heighten the need for The Bahamas and other Caribbean countries to be leaders in renewable energies, agriculture and tech industries. If not, more disasters will come and we will have to continue depending largely on tourism for economic recovery.

• Read NDP @ www.vision2040bahamas.org. Roderick A. Simms II is an advocate for sustainable family island growth and development. Email: RASII@ME.com.

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